Virginia on Track to Increase Sales Tax
- Sales Tax Rate Changes
- Apr 5, 2013 | Gail Cole
Earlier this month, Virginia lawmakers approved Governor Robert F. McDonnell’s (R) Transportation Plan, as amended. On March 25, the governor recommended changes to HB 2313 as passed by the House and the Senate. His recommendation now awaits review by the House.
The measure would increase the state sales and use tax from 4% to 4.3%, pursuant to HB 2313. The additional sales tax revenue would fund the Highway Maintenance and Operating Fund, the Intercity Passenger Rail Operating and Capital Fund, and the Commonwealth Mass Transit Fund. In addition, the tax on sales of motor vehicles would increase from 3% to 4.3% over a four-year period.
The share of existing general sales and use tax revenue used for transportation would increase from 0.5% to 0.675%, over a period of four years. Again, additional revenue would go toward the Highway Maintenance and Operating Fund.
The bill would also eliminate the $0.175 per gallon tax on motor fuels. That would be replaced with a percentage-based tax: 3.5% for gasoline and 6% for diesel fuel. The bill allows for a 2.5% tax refund for diesel fuel purchased for vehicles with a gross vehicle weight of 10,000 pounds or less.
0.125% of existing sales and use tax revenue would be allocated to public education under the measure.
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